Vital to the U.S. economy and military capabilities, tiny Israel’s unparalleled achievements in industry and intellect have conjured up the familiar anti-Semitic frenzies among all the economically and morally failed societies of the socialist and Islamist Third World, from Iran to Venezuela. They all imagine that by delegitimizing, demoralizing, defeating or even destroying Israel, they could take a major step toward bringing down the entire capitalist West. To most sophisticated Westerners, the jihadist focus on Israel seems bizarre and counterproductive. But on the centrality of Israel the jihadists have it right. U.S. policy is crippled by a preoccupation with the claimed grievances of the Palestinians and their supposed right to a state of their own in the West Bank and Gaza. But the Palestinian land could not have supported one-tenth as many Palestinians as it does today without the heroic works of reclamation and agricultural development by Jewish settlers beginning in the 1880s, when Arabs in Palestine numbered a few hundred thousand. Actions have consequences. When the Palestinian Liberation Organization launched two murderous Intifadas within a little over a decade, responded to withdrawals from southern Lebanon and Gaza by launching thousands of rockets on Israeli towns, spurned every sacrificial offer of « Land for Peace » from Oslo through Camp David, and reversed the huge economic gains fostered in the Palestinian territories between 1967 and 1990, the die was cast.George Gilder

The sad truth of Arab social and economic development is that the free-market reforms and economic liberalization that remade East Asia and Latin America bypassed the Arab world. This is the great challenge of the Arab Spring and of the forces that brought it about. The marketplace has had few, if any, Arab defenders. If the tremendous upheaval at play in Arab lands is driven by a desire to capture state power—and the economic prerogatives that come with political power—the revolution will reproduce the failures of the past. Fouad Ajami

The dictators who came to power in the 1950s and ’60s were economic levelers who impoverished their countries. Today’s unrest is the result.

Fouad Ajami

The WSJ

July 8, 2011

The late great Austrian economist F.A. Hayek would have seen the Arab Spring for the economic revolt it was right from the start. For generations the Arab populations had bartered away their political freedom for economic protection. They rose in rebellion when it dawned on them that the bargain had not worked, that the system of subsidies, and the promise of equality held out by the autocrats, had proven a colossal failure.

What Hayek would call the Arab world’s « road to serfdom » began when the old order of merchants and landholders was upended in the 1950s and ’60s by a political and military class that assumed supreme power. The officers and ideologues who came to rule Egypt, Syria, Iraq, Libya, Algeria and Yemen were men contemptuous of the marketplace and of economic freedom. As a rule, they hailed from the underclass and had no regard for the sanctity of wealth and property. They had come to level the economic order, and they put the merchant classes, and those who were the mainstay of the free market, to flight.

It was in the 1950s that the foreign minorities who had figured prominently in the economic life of Egypt after the cotton boom of the 1860s, and who had drawn that country into the web of the world economy, would be sent packing. The Jews and the Greeks and the Italians would take with them their skills and habits. The military class, and the Fabian socialists around them, distrusted free trade and the marketplace and were determined to rule over them or without them.

The Egyptian way would help tilt the balance against the private sector in other Arab lands as well. In Iraq, the Jews of the country, on its soil for well over two millennia, were dispossessed and banished in 1950-51. They had mastered the retail trade and were the most active community in the commerce of Baghdad. Some Shiite merchants stepped into their role, but this was short-lived. Military officers and ideologues of the Baath Party from the « Sunni triangle »—men with little going for them save their lust for wealth and power—came into possession of the country and its oil wealth. They, like their counterparts in Egypt, were believers in central planning and « social equality. » By the 1980s, Saddam Hussein, a Sunni thug born from crushing poverty, would come to think of the wealth of the country as his own.

In Libya, a deranged Moammar Gadhafi did Saddam one better. After his 1969 military coup, he demolished the private sector in 1973 and established what he called « Islamic Socialism. » Gadhafi’s so-called popular democracy basically nationalized the entire economy, rendering the Libyan people superfluous by denying them the skills and the social capital necessary for a viable life.

In his 1944 masterpiece, « The Road to Serfdom, » Hayek wrote that in freedom-crushing totalitarian societies « the worst get on top. » In words that described the Europe of his time but also capture the contemporary Arab condition, he wrote: « To be a useful assistant in the running of a totalitarian state, it is not enough that a man should be prepared to accept specious justification of vile deeds; he must himself be prepared actively to break every moral rule he has ever known if this seems necessary to achieve the end set for him. Since it is the supreme leader who alone determines the ends, his instruments must have no moral convictions of their own. »

This well describes the decades-long brutal dictatorship of Syria’s Hafez al-Assad, and now his son Bashar’s rule. It is said that Hafez began his dynasty with little more than a modest officer’s salary. His dominion would beget a family of enormous wealth: The Makhloufs, the in-laws of the House of Assad, came to control crucial sectors of the Syrian economy.

The Alawites, the religious sect to which the Assad clan belongs, had been poor peasants and sharecroppers, but political and military power raised them to new heights. The merchants of Damascus and Aleppo, and the landholders in Homs and Hama, were forced to submit to the new order. They could make their peace with the economy of extortion, cut Alawite officers into long-established businesses, or be swept aside.

But a decade or so ago this ruling bargain—subsidies and economic redistribution in return for popular quiescence— began to unravel. The populations in Arab lands had swelled and it had become virtually impossible to guarantee jobs for the young and poorly educated. Economic nationalism, and the war on the marketplace, had betrayed the Arabs. They had the highest unemployment levels among developing nations, the highest jobless rate among the young, and the lowest rates of economic participation among women. The Arab political order was living on borrowed time, and on fear of official terror.

Attempts at « reform » were made. But in the arc of the Arab economies, the public sector of one regime became the private sector of the next. Sons, sons-in-law and nephews of the rulers made a seamless transition into the rigged marketplace when « privatization » was forced onto stagnant enterprises. Of course, this bore no resemblance to marketdriven economics in a transparent system. This was crony capitalism of the worst kind, and it was recognized as such by Arab populations. Indeed, this economic plunder was what finally severed the bond between Hosni Mubarak and an Egyptian population known for its timeless patience and stoicism.

The sad truth of Arab social and economic development is that the free-market reforms and economic liberalization that remade East Asia and Latin America bypassed the Arab world. This is the great challenge of the Arab Spring and of the forces that brought it about. The marketplace has had few, if any, Arab defenders. If the tremendous upheaval at play in Arab lands is driven by a desire to capture state power—and the economic prerogatives that come with political power—the revolution will reproduce the failures of the past.

In Yemen, a schoolteacher named Amani Ali, worn out by the poverty and anarchy of that poorest of Arab states, recently gave voice to a sentiment that has been the autocrats’ prop: « We don’t want change, » he said. « We don’t want freedom. We want food and safety. » True wisdom, and an end to their road to serfdom, will only come when the Arab people make the connection between economic and political liberty. David Klein

Mr. Ajami, a senior fellow at Stanford University’s Hoover Institution, is co-chairman of Hoover’s Working Group on Islamism and the International Order.

America needs the Jewish state’s technology and innovation as much as it needs us. .

America’s enemies understand deeply and intuitively that no U.S. goals or resources in the Middle East are remotely as important as Israel. Why don’t we?

George Gilder

T he WSJ

July 5, 2011

Israel cruised through the recent global slump with scarcely a down quarter and no deficit or stimulus package. It is steadily increasing its global supremacy, behind only the U.S., in an array of leading-edge technologies. It is the global master of microchip design, network algorithms and medical instruments.

During a period of water crises around the globe, Israel is incontestably the world leader in water recycling and desalinization. During an epoch when all the world’s cities, from Seoul to New York, face a threat of terrorist rockets, Israel’s newly battle-tested « Iron Dome » provides a unique answer based on original inventions in microchips that radically reduce the weight and cost of the interceptors.

Israel is also making major advances in longer-range missile defense, robotic warfare, and unmanned aerial vehicles that can stay aloft for days. In the face of a global campaign to boycott its goods, and an ever-ascendant shekel, it raised its exports 19.9% in 2010’s fourth quarter and 27.3% in the first quarter of 2011.

Israelis supply Intel with many of its advanced microprocessors, from the Pentium and Sandbridge, to the Atom and Centrino. Israeli companies endow Cisco with new core router designs and real-time programmable network processors for its next-generation systems. They supply Apple with robust miniaturized solid state memory systems for its iPhones, iPods and iPads, and Microsoft with critical user interface designs for the OS7 product line and the Kinect gaming motion-sensor interface, the fastest rising consumer electronic product in history.

Vital to the U.S. economy and military capabilities, tiny Israel’s unparalleled achievements in industry and intellect have conjured up the familiar anti-Semitic frenzies among all the economically and morally failed societies of the socialist and Islamist Third World, from Iran to Venezuela. They all imagine that by delegitimizing, demoralizing, defeating or even destroying Israel, they could take a major step toward bringing down the entire capitalist West.

To most sophisticated Westerners, the jihadist focus on Israel seems bizarre and counterproductive. But on the centrality of Israel the jihadists have it right.

U.S. policy is crippled by a preoccupation with the claimed grievances of the Palestinians and their supposed right to a state of their own in the West Bank and Gaza. But the Palestinian land could not have supported one-tenth as many Palestinians as it does today without the heroic works of reclamation and agricultural development by Jewish settlers beginning in the 1880s, when Arabs in Palestine numbered a few hundred thousand.

Actions have consequences. When the Palestinian Liberation Organization launched two murderous Intifadas within a little over a decade, responded to withdrawals from southern Lebanon and Gaza by launching thousands of rockets on Israeli towns, spurned every sacrificial offer of « Land for Peace » from Oslo through Camp David, and reversed the huge economic gains fostered in the Palestinian territories between 1967 and 1990, the die was cast.

It’s time to move on.

For the U.S., moving on means a sober recognition that Israel is not too large but too small. It boasts a booming economy still absorbing overseas investment and a substantial net inflow of immigrants. Yet it is cramped in a space the size of New Jersey, hemmed in by enemies on three sides, with 60,000 Hezbollah and Hamas rockets at the ready, and Iran lurking with nuclear ambitions and genocidal intent over the horizon.

Clearly, Israel needs every acre it now controls. Still, despite its huge technological advances, its survival continues to rely on peremptory policing of the West Bank, on an ever-advancing shield of antimissile technology, and on the unswerving commitment of the U.S.

But this is no one-way street. At a time of acute recession, debt overhang, suicidal energy policy and venture capitalists who hope to sustain the U.S. economy and defense with Facebook pages and Twitter feeds, U.S. defense and prosperity increasingly depend on the ever-growing economic and technological power of Israel.

If we stand together we can deter or defeat any foe. Failure, however, will doom the U.S. and its allies to a long war against ascendant jihadist barbarians, with demographics and nuclear weapons on their side, and no assurance of victory. We need Israel as much as it needs us.

Mr. Gilder is a founder of the Discovery Institute and author of « The Israel Test » (Richard Vigilante Books, 2009).